They're going to kick up a stink back at head office

IT IS not a good time to be a state public servant. Revenues are tight and the government is cutting across the board. With two-thirds of the state budget consumed by health and education, it's impossible to make meaningful cuts and leave these areas untouched. Political imperatives mean it's easier to cut central offices than front-line staff. This plays to the idea, often espoused by the conservative side of politics, that bureaucracies are bloated and inefficient. But often these bureaucracies contain the more capable and ambitious staff who have seen a path to advancement.

The government says that the savings will be achieved by limiting travel, reducing the number of external consultants the department engages and scaling back procurement in head office, but the real savings come by cutting staff numbers.

While the state government points out that the education budget is higher than ever, that there 520 more teachers than last year, cutting 300 jobs in head office will have an effect. All those people do things.

The rally at the weekend protesting against cuts to the education budget contained some comfort for all sides of the issue. For the Teachers Federation and other education groups, it was an effective rallying call, and continues to put pressure on the government.

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For the government, the fact it was held on a Sunday, instead of the usual workday strike by the federation, signals a change of tactics which will be less disruptive to students and parents. The federation last week accepted the 2.5 per cent salary cap imposed by the state government. This suggest teachers know they have less industrial muscle than with previous Labor governments, and are now turning to public persuasion to make their case.

The new industrial agreement for teachers is a compromise between the union's opposition to empowering principals - most of whom, it should be pointed out, are their members - and the government's push to devolve power from the central bureaucracy to local schools, where they believe principals are better placed to decide priorities, particularly who they employ. The minister, Adrian Piccoli, has bragged that it means that every second staff appointment will now be on merit. But the question should be asked, only one in two appointments?

The new industrial agreement leaves the staffing formula intact, which means that class sizes will remain the same. The decision several years ago to lower class sizes, particularly in kindergarten, has proven to be extremely expensive. Class sizes are a totemic issue for the Teachers Federation, but there is little if no evidence that lowering class sizes increases academic performance.

The federation has been campaigning hard on the basis is that the Auditor-General's revision of the state budget - which turned a $330 million deficit into a $680 million surplus - means that the education cutbacks should be reversed.

Unfortunately the nature of the revision undercuts this argument. The biggest change to the state budget was $800 million which was paid by the federal to the state government shortly before the end of the financial year. This was a money-shuffling exercise to make this year's federal budget look better.

It had the effect of making the state budget look better last financial year and worse this financial year, but its real effect is zero. It's just an accounting trick. The real reason for the state government cutbacks are lower forecasts of tax revenues due to the subdued economic outlook and in particular lower GST payments as Australians spend less and save more.

The union has argued that devolving power to local schools is a way of disguising funding cutbacks. The key to the success of the government's Local Schools, Local Decisions policy is building capability among principals, some of whom find it difficult to make the mental leap from worker to boss - as their membership of a union demonstrates. Building those capabilities requires training, support and resources. It won't work if principals are left to fend for themselves.